Paul Krugman Thread

[dairygirl4u2c]

[size=3]i wonder what would happen if i started a tread, just for whenever i see an interesting paul krugman article?[/size]
[size=3]hm.[/size]
[size=3]definitely coulda picked a better article for a starter, if i do go that route, oh well. [/size]


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[size=3]Rabbit Hole Economics[/size]
[size=3]Reading the transcript of Tuesday’s Republican debate on the economy is, for anyone who has actually been following economic events these past few years, like falling down a rabbit hole. Suddenly, you find yourself in a fantasy world where nothing looks or behaves the way it does in real life.[/size]

[size=3]And since economic policy has to deal with the world we live in, not the fantasy world of the G.O.P.’s imagination, the prospect that one of these people may well be our next president is, frankly, terrifying.[/size]

[size=3]In the real world, recent events were a devastating refutation of the free-market orthodoxy that has ruled American politics these past three decades. Above all, the long crusade against financial regulation, the successful effort to unravel the prudential rules established after the Great Depression on the grounds that they were unnecessary, ended up demonstrating — at immense cost to the nation — that those rules were necessary, after all.[/size]

[size=3]But down the rabbit hole, none of that happened. We didn’t find ourselves in a crisis because of runaway private lenders like Countrywide Financial. We didn’t find ourselves in a crisis because Wall Street pretended that slicing, dicing and rearranging bad loans could somehow create AAA assets — and private rating agencies played along. We didn’t find ourselves in a crisis because “shadow banks” like Lehman Brothers exploited gaps in financial regulation to create bank-type threats to the financial system without being subject to bank-type limits on risk-taking.[/size]

[size=3]No, in the universe of the Republican Party we found ourselves in a crisis because Representative Barney Frank forced helpless bankers to lend money to the undeserving poor.[/size]

[size=3]O.K., I’m exaggerating a bit — but not much. Mr. Frank’s name did come up repeatedly as a villain in the crisis, and not just in the context of the Dodd-Frank financial reform bill, which Republicans want to repeal. You have to marvel at his alleged influence given the fact that he’s a Democrat and the vast bulk of the bad loans now afflicting our economy were made while George W. Bush was president and Republicans controlled the House with an iron grip. But he’s their preferred villain all the same.[/size]

[size=3]The demonization of Mr. Frank aside, it’s now obviously orthodoxy on the Republican side that government caused the whole problem. So what you need to know is that this orthodoxy has hardened even as the supposed evidence for government as a major villain in the crisis has been discredited. The fact is that government rules didn’t force banks to make bad loans, and that government-sponsored lenders, while they behaved badly in many ways, accounted for few of the truly high-risk loans that fueled the housing bubble.[/size]

[size=3]But that’s history. What do the Republicans want to do now? In particular, what do they want to do about unemployment?[/size]

[size=3]Well, they want to fire Ben Bernanke, the chairman of the Federal Reserve — not for doing too little, which is a case one can make, but for doing too much. So they’re obviously not proposing any job-creation action via monetary policy.[/size]

[size=3]Incidentally, during Tuesday’s debate, Mitt Romney named Harvard’s N. Gregory Mankiw as one of his advisers. How many Republicans know that [url="http://www.bloomberg.com/apps/news?pid=newsarchive&sid=auyuQlA1lRV8"]Mr. Mankiw at least used to advocate[/url] — correctly, in my view — deliberate inflation by the Fed to solve our economic woes?[/size]

[size=3]So, no monetary relief. What else? Well, the Cheshire Cat-like Rick Perry — he seems to be fading out, bit by bit, until only the hair remains — claimed, implausibly, that he could create 1.2 million jobs in the energy sector. Mr. Romney, meanwhile, called for permanent tax cuts — basically, let’s replay the Bush years! And Herman Cain? Oh, never mind.[/size]

[size=3]By the way, has anyone else noticed the disappearance of budget deficits as a major concern for Republicans once they start talking about tax cuts for corporations and the wealthy?[/size]

[size=3]It’s all pretty funny. But it’s also, as I said, terrifying.[/size]

[size=3]The Great Recession should have been a huge wake-up call. Nothing like this was supposed to be possible in the modern world. Everyone, and I mean everyone, should be engaged in serious soul-searching, asking how much of what he or she thought was true actually isn’t.[/size]

[size=3]But the G.O.P. has responded to the crisis not by rethinking its dogma but by adopting an even cruder version of that dogma, becoming a caricature of itself. During the debate, the hosts played a clip of Ronald Reagan calling for increased revenue; today, no politician hoping to get anywhere in Reagan’s party would dare say such a thing.[/size]

[size=3]It’s a terrible thing when an individual loses his or her grip on reality. But it’s much worse when the same thing happens to a whole political party, one that already has the power to block anything the president proposes — and which may soon control the whole government.[/size]
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Edited October 14, 2011 by dairygirl4u2c

[dairygirl4u2c]

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[size=3]i have always like this one. [/size]

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[size=3]Banana Republic Here We Come[/size][/size][/color]
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[size=3]Once upon a time, a Latin American political party promised to help motorists save money on gasoline. How? By building highways that ran only downhill.[/size][/size][/color]
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[size=3]I’ve always liked that story, but the truth is that the party received hardly any votes. And that means that the joke is really on us. For these days one of America’s two great political parties routinely makes equally nonsensical promises. Never mind the war on terror, the party’s main concern seems to be the war on arithmetic. And this party has a better than even chance of retaking at least one house of Congress this November.[/size][/size][/color]
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[size=3]Banana republic, here we come.[/size][/size][/color]
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[size=3]On Thursday, House Republicans released their “Pledge to America,” supposedly outlining their policy agenda. In essence, what they say is, “Deficits are a terrible thing. Let’s make them much bigger.” The document repeatedly condemns federal debt — 16 times, by my count. But the main substantive policy proposal is to make the Bush tax cuts permanent, which independent estimates say would add about $3.7 trillion to the debt over the next decade — about $700 billion more than the Obama administration’s tax proposals.[/size][/size][/color]
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[size=3]True, the document talks about the need to cut spending. But as far as I can see, there’s only one specific cut proposed — canceling the rest of the Troubled Asset Relief Program, which Republicans claim (implausibly) would save $16 billion. That’s less than half of 1 percent of the budget cost of those tax cuts. As for the rest, everything must be cut, in ways not specified — “except for common-sense exceptions for seniors, veterans, and our troops.” In other words, Social Security, Medicare and the defense budget are off-limits.[/size][/size][/color]
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[size=3]So what’s left? Howard Gleckman of the nonpartisan Tax Policy Center has done the math. As he points out, the only way to balance the budget by 2020, while simultaneously (a) making the Bush tax cuts permanent and (b) protecting all the programs Republicans say they won’t cut, is to completely abolish the rest of the federal government: “No more national parks, no more Small Business Administration loans, no more export subsidies, no more N.I.H. No more Medicaid (one-third of its budget pays for long-term care for our parents and others with disabilities). No more child health or child nutrition programs. No more highway construction. No more homeland security. Oh, and no more Congress.”[/size][/size][/color]
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[size=3]The “pledge,” then, is nonsense. But isn’t that true of all political platforms? The answer is, not to anything like the same extent. Many independent analysts believe that the Obama administration’s long-run budget projections are somewhat too optimistic — but, if so, it’s a matter of technical details. Neither President Obama nor any other leading Democrat, as far as I can recall, has ever claimed that up is down, that you can sharply reduce revenue, protect all the programs voters like, and still balance the budget.[/size][/size][/color]
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[size=3]And the G.O.P. itself used to make more sense than it does now. Ronald Reagan’s claim that cutting taxes would actually increase revenue was wishful thinking, but at least he had some kind of theory behind his proposals. When former President George W. Bush campaigned for big tax cuts in 2000, he claimed that these cuts were affordable given (unrealistic) projections of future budget surpluses. Now, however, Republicans aren’t even pretending that their numbers add up.[/size][/size][/color]
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[size=3]So how did we get to the point where one of our two major political parties isn’t even trying to make sense?[/size][/size][/color]
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[size=3]The answer isn’t a secret. The late Irving Kristol, one of the intellectual godfathers of modern conservatism, once wrote frankly about why he threw his support behind tax cuts that would worsen the budget deficit: his task, as he saw it, was to create a Republican majority, “so political effectiveness was the priority, not the accounting deficiencies of government.” In short, say whatever it takes to gain power. That’s a philosophy that now, more than ever, holds sway in the movement Kristol helped shape.[/size][/size][/color]
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[size=3]And what happens once the movement achieves the power it seeks? The answer, presumably, is that it turns to its real, not-so-secret agenda, which mainly involves privatizing and dismantling Medicare and Social Security.[/size][/size][/color]
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[size=3]Realistically, though, Republicans aren’t going to have the power to enact their true agenda any time soon — if ever. Remember, the Bush administration’s attack on Social Security was a fiasco, despite its large majority in Congress — and it actually increased Medicare spending.[/size][/size][/color]
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[size=3]So the clear and present danger isn’t that the G.O.P. will be able to achieve its long-run goals. It is, rather, that Republicans will gain just enough power to make the country ungovernable, unable to address its fiscal problems or anything else in a serious way. As I said, banana republic, here we come.[/size][/size][/color]
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[dairygirl4u2c]

[quote]
Boring Cruel Romantics
[b] By [url="http://topics.nytimes.com/top/opinion/editorialsandoped/oped/columnists/paulkrugman/index.html?inline=nyt-per"]PAUL KRUGMAN[/url][/b]


[b] Published: November 20, 2011[/b]


Boring Cruel Romantics


There’s a word I keep hearing lately: “technocrat.” Sometimes it’s used as a term of scorn — the creators of the euro, we’re told, were technocrats who failed to take human and cultural factors into account. Sometimes it’s a term of praise: the newly installed prime ministers of Greece and Italy are described as technocrats who will rise above politics and do what needs to be done.


[b]I call foul. I know from technocrats; sometimes I even play one myself. And these people — the people who bullied Europe into adopting a common currency, the people who are bullying both Europe and the United States into austerity — aren’t technocrats. They are, instead, deeply impractical romantics.[/b]
[b]They are, to be sure, a peculiarly boring breed of romantic, speaking in turgid prose rather than poetry. And the things they demand on behalf of their romantic visions are often cruel, involving huge sacrifices from ordinary workers and families.[/b] But the fact remains that those visions are driven by dreams about the way things should be rather than by a razzle dazzle assessment of the way things really are.
And to save the world economy we must topple these dangerous romantics from their pedestals.
Let’s start with the creation of the euro. If you think that this was a project driven by careful calculation of costs and benefits, you have been misinformed.
The truth is that Europe’s march toward a common currency was, from the beginning, a dubious project on any objective economic analysis. [b]The continent’s economies were too disparate to function smoothly with one-size-fits-all monetary policy,[/b] too likely to experience “asymmetric shocks” in which some countries slumped while others boomed. And unlike U.S. states, European countries weren’t part of a single nation with a unified budget and a labor market tied together by a common language.
So why did those “technocrats” push so hard for the euro, disregarding many warnings from economists? Partly it was the dream of European unification, which the Continent’s elite found so alluring that its members waved away practical objections. And partly it was a leap of economic faith, the hope — driven by the will to believe, despite vast evidence to the contrary — that everything would work out as long as nations practiced the Victorian virtues of price stability and fiscal prudence.
Sad to say, things did not work out as promised. [b]But rather than adjusting to reality, those supposed technocrats just doubled down [/b]— insisting, for example, that Greece could avoid default through savage austerity, when anyone who actually did the math knew better.
[b]Let me single out in particular the European Central Bank (E.C.B.), which is supposed to be the ultimate technocratic institution, and which has been especially notable for taking refuge in fantasy as things go wrong. Last year, for example, the bank affirmed its belief in the confidence fairy — that is, the claim that budget cuts in a depressed economy will actually promote expansion, by raising business and consumer confidence. Strange to say, that hasn’t happened anywhere.[/b]
And now, with Europe in crisis — a crisis that can’t be contained unless the E.C.B. steps in to stop the vicious circle of financial collapse — its leaders still cling to the notion that price stability cures all ills. Last week Mario Draghi, the E.C.B.’s new president, declared that “anchoring inflation expectations” is “the major contribution we can make in support of sustainable growth, employment creation and financial stability.”
This is an utterly fantastic claim to make at a time when expected European inflation is, if anything, too low, and what’s roiling the markets is fear of more or less immediate financial collapse. And it’s [b]more like a religious proclamation than a technocratic assessment.[/b]
Just to be clear, this is not an anti-European rant, since we have our own pseudo-technocrats warping the policy debate. In particular, allegedly nonpartisan groups of “experts” — the Committee for a Responsible Federal Budget, the Concord Coalition, and so on — have been all too successful at hijacking the economic policy debate, shifting its focus from jobs to deficits.
Real technocrats would have asked why this makes sense at a time when the unemployment rate is 9 percent and the interest rate on U.S. debt is only 2 percent. But like the E.C.B., our fiscal scolds have their story about what’s important, and they’re sticking to it no matter what the data say.
[b]So am I against technocrats? Not at all. I like technocrats — technocrats are friends of mine. And we need technical expertise to deal with our economic woes. But our discourse is being badly distorted by ideologues and wishful thinkers — boring, cruel romantics — pretending to be technocrats. And it’s time to puncture their pretensions.[/b][/quote]

the quotes highlighting, the urge from conservatives, to think cutting taxes will cure all ills. or maybe they think cutting spending will? the tax cutting is what got the country into the current problem, the US, as an analogy to this article, and cutting spending would only hurt the average Joe, too much, too much to ask.

Edited November 22, 2011 by dairygirl4u2c

[dairygirl4u2c]

edit the last post... to say that cutting too much would hurt them. which, as i hope is obvious, means that we need more technocrats, to help explain to us how to cut that spending. obviously spending needs to be cut.